Homeowners in some states get a period of time—called a redemption period—during which they can buy their property back after a foreclosure sale. Colorado law used to provide a redemption period to homeowners following a foreclosure, but the law changed. Now, foreclosed homeowners in Colorado don’t get a chance to redeem the property after the sale. Under the revised law, junior lienholders are the only parties who may redeem.
Colorado foreclosures are usually nonjudicial. In a Colorado nonjudicial foreclosure, the bank has to complete specific out-of-court steps, and one minor in-court step, before selling the property at a foreclosure sale. (Even though the process is considered nonjudicial, the court plays a minor role in a typical Colorado foreclosure. Get details about the Colorado foreclosure process.)
Before 2008, a foreclosed homeowner had 75 days to “redeem” (buy back) the property after a foreclosure sale by paying the new owner the total price of the home, including any foreclosure fees and interest. If the homeowner didn’t redeem, then each junior lienholder had an opportunity to redeem.
As of January 1, 2008, Colorado’s redemption period law changed. The new law eliminated the homeowner's right to redeem the property following a foreclosure sale. Some outdated websites state that homeowners get the right to redeem the home after a foreclosure sale in Colorado, but this information is incorrect.
Under current Colorado law, the foreclosed homeowner doesn’t get the right to redeem the property. (Colo. Rev. Stat. § 38-38-302.)
Only those parties that held a junior lien, like a second mortgage, may redeem the property after the sale. (Colo. Rev. Stat. § 38-38-302, § 38-38-100.3 (11).) (Learn more about junior liens and how lien priority works in a foreclosure.)
The 2008 law that did away with the homeowner's right to redeem also lengthened the period between when the public trustee (the party that manages the foreclosure process) records the Notice of Election and Demand (NED), which is the first official step in a Colorado nonjudicial foreclosure, and the sale. Under the prior law, a foreclosure sale had to happen 45 to 60 calendar days after the trustee recorded the NED. Now, if the property is non-agricultural, the sale is set 110 to 125 days after the trustee records the NED. (If the property is agricultural, the time frame is 215 to 230 calendar days.)
This period gives the homeowner time to get current on the loan and “cure” the default. A homeowner who decides to get caught up on the loan has to file a notice of intent to cure with the public trustee at least 15 calendar days before the sale. The homeowner will then receive a cure statement explaining the amount needed to stop the foreclosure and gets until 12:00 (noon) on the day before the foreclosure sale to cure the default.
The extended time period before the sale also gives the homeowner more time to work with the loan servicer to avoid a foreclosure through a loan modification or other workout option. If the homeowner sends the servicer a complete application for a foreclosure alternative—called a “loss mitigation” application—more than 37 days before a foreclosure sale, the servicer has to review the application before going ahead with the sale. (Learn more about Federal Mortgage Servicing Rules: Protections Against Foreclosure.)
For more information about the foreclosure process in Colorado, potential defenses to a foreclosure, and the procedures for curing the default prior to the sale, consider talking to a local foreclosure attorney. If you need information about different ways to avoid a foreclosure sale, consider talking to a HUD-approved housing counselor.
